Smarter tax policy would have got these 800+ lots back into use a lot faster

map of vacant lots
Vacant lots offered for sale (from Hilco site)

Tribune reports (via yahoo news, alternative link) that a portfolio of 812 lots, nearly all in Chicago, will be sold as a result of bankruptcy of the owner.  Apparently a couple of north suburban residents were holding them in hopes of speculative gain, but amassed fines and back taxes such that the lots are now to be auctioned off.

The Tribune interviewed some potential bidders who hoped to build housing or commercial structures on the sites.

The article does not bother to mention that Cook County taxpayers provide at least two special benefits to owners of vacant lots.  First, because there is no improvement on the lot, only the land value is taxed, whereas similar lots containing buildings would pay much more.  And second, it is County policy to assess vacant land at only 10% of market value, whereas commercial and industrial uses would are assessed at 25% (unless granted special favors).

If Cook County omitted all improvements from assessments, and levied taxes based on land value only, a considerable tax burden would have been shifted to speculators from homeowners and others who productively use their land.  And this bankruptcy sale, getting the land back into use, would have happened much sooner (or perhaps the owners would never have tried to speculate in land).

Have medallion prices peaked?

When last reviewed here, prices for Chicago taxi medallions had risen to an average of $185,000.  Prices have since peaked at $202,000, but now are below that previous level.  The March Chicago Dispatcher printed edition includes an ad offering to pay medallion owners $750/month, which implies almost 5% ROI if prices stabilize.

Month                Price               Source

February ’10      $183,000        Chicago Dispatcher
January ’10        $184,000        Chicago Dispatcher
December ’09    $202,000       Chicago Dispatcher
October ‘09       $185,000       City of Chicago
May ‘09             $170,000       Chicago Dispatcher
April ‘09            $164,500        Chicago Dispatcher
March ‘09           $165,000        Chicago Dispatcher
February ‘09      $158,000        Chicago Dispatcher
Feb ‘07               $  77,000        Chicago Tribune
2004                   >$40,000       Chicago Tribune
1991                     $28,000         Chicago Sun Times

Eventually the City of Chicago may post more recent information here (scroll down to “Taxicab Medallion Transfer Price List” for the pdf report.)

Medallions now at $155,000

Back in April, the median price for Chicago taxi medallions was $125,000. While almost every kind of “real estate” has continued crashing since then, medallions now (December 2008) have reached a median price of $155,000. Chicago Dispatcher says they get their data from the City of Chicago, but I haven’t found it on the City’s web site. Curiously, the only medallion listed on cabmarket.com is priced at just $139,000, and has lingered unsold for 54 days.

Korea mortgages conservatively

From “South Korea’s High Household Debt Adds Financial Woes” WSJ Nov 29-30 ’08

South Koreans are forbidden by law to engage in high levels of borrowing for real estate…loan-to-value ratio of South Korean real estate is 47%, well below the 90% and higher ratios seen in parts of Europe and the U.S.

Apparently this doesn’t prevent heavy borrowing, which is “rooted in high housing and education costs.”

One would think that, if in fact Korean real estate is less leveraged than elsewhere, they’d be less affected by economic instability.  It would be nice to know more.